Sasol Limited has released its reviewed financial results for the six months ending 31 December 2023. Despite operational improvements in South Africa, the company experienced a decline in earnings, citing a volatile macroeconomic environment, weakened oil and petrochemical prices, unstable product demand, and inflationary pressure as contributing factors.
Earnings Performance:
Sasol’s financial performance for the first half of 2024 reflected significant challenges stemming from the global economic landscape. The company reported a revenue of R136.3 billion, down from R149.8 billion in the prior period, primarily due to lower chemical product prices across all regions. Earnings before interest and tax (EBIT) stood at R15.9 billion, marking a substantial decrease of R8.3 billion (34%) compared to the previous period.
The company attributed this decline to lower revenue and reduced gains on the valuation of financial instruments and derivative contracts, offset by lower chemical feedstock prices in various regions. Additionally, remeasurement items of R5.8 billion were recorded, mainly driven by impairments of key assets due to a further deterioration in the macroeconomic outlook and reduced market demand.
Key Metrics:
| Metric | Half Year Ended 31 Dec 2023 | Half Year Ended 31 Dec 2022 | Change % |
|---|---|---|---|
| EBIT (R million) | 15,925 | 24,204 | (34) |
| Headline earnings (R million) | 12,851 | 19,389 | (34) |
| Basic earnings per share | 15.19 | 23.23 | (35) |
| Headline earnings per share | 20.37 | 30.90 | (34) |
| Interim dividend (Rand per share) | 2.00 | 7.00 | (71) |
Dividend Decline:
In response to the challenging financial landscape, Sasol’s board of directors declared an interim gross cash dividend of South African 200 cents per share for the six months ended 31 December 2023, a significant decrease from the 700 cents per share declared in the prior period. The decision reflects the company’s commitment to prudent financial management amidst prevailing economic uncertainties.
Outlook and Caution:
Sasol remains cautiously optimistic about its future prospects despite the current economic challenges. The company continues to focus on operational efficiency and cost optimization measures to mitigate the impact of volatile market conditions. However, it acknowledges the need for vigilance and flexibility in navigating the evolving economic landscape.
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